The IRS Helping Farmers? That Sounds Odd!! What’s Going On?

As a farmer, you are up against everything mother nature has to throw at you. Insects, lack of pollinating insects, hail, wind, cold weather, too much snow, not enough snow, too much rain, and not enough rain.  And yet they still farm!

Where Do Farmers Turn For Help?

Most recently the state's challenge was drought.  No rain means no pasture for livestock and no hay for the winter months. So what's a farmer to do?  You have to sell the herd.

The Internal Revenue Service (IRS) who knows all, sees all, and perhaps even controls the weather as far as we know, is throwing a rope to Washington farmers in some counties.  Farmers and ranchers who were forced to sell livestock due to drought may have an additional year to replace the livestock and defer tax on any gains from the forced sales, according to the Internal Revenue Service.

There Are Restrictions

However not every tom, dick or Herford qualifies for the program. The relief generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy, or breeding purposes. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, or poultry, are not eligible

The IRS says to qualify for relief, farmers or ranchers must have sold livestock on account of drought conditions in an applicable region. This is a county or other jurisdiction designated as eligible for federal assistance plus counties contiguous to it. Notice 2021-55, posted today on IRS.gov, lists applicable regions in 36 states and one U.S. territory.

Who Qualifies

For Washington, this applies to the counties of Adams, Asotin, Benton, Chelan, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Island, Kittitas, Klickitat, Lincoln, Okanogan, Pend Oreille, San Juan, Skagit, Skamania, Spokane, Stevens, Wahkiakum, Walla Walla, Whatcom, Whitman, and Yakima.

More information on reporting drought sales and other farm-related tax issues can be found in Publication 225, Farmer’s Tax Guide, available on IRS.gov.